Asian shares mixed after a rebound for Nvidia propped up weakened Wall Street
A currency trader passes under the screen at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea
Asian shares have shown a mixed performance following a rebound for Nvidia that bolstered a weakened Wall Street.
Japan's Nikkei surged 1.4% to 39,726.39, fuelled by robust demand for tech shares sparked by the excitement over Nvidia and artificial intelligence. Tokyo Electron saw a 3.2% increase while Advantest Corp. rocketed 6.6%. Shin-Etsu Chemical Co. also rose by 1.3%. Seoul's Kospi index was up slightly by 0.2% at 2,781.15.
However, Chinese shares took a step back. Hong Kong's Hang Seng dipped 0.1% lower to 18,052.55 and the Shanghai Composite index slipped 0.5% to 2,936.71. Australia's S&P/ASX 200 fell 0.9% to 7,765.40. Shares in Taiwan and India experienced an uplift and edged higher in Thailand.
On Tuesday, the S&P 500 rose 0.4% and neared its all-time high set a week earlier, closing at 5,469.30. The Dow Jones Industrial Average, which does not include Nvidia, dropped 0.8% to 39,112.16, and the Nasdaq composite jumped 1.3% to 17,717.65. Most stocks outside of Wall Street's frenzy around artificial-intelligence technology fell. Nvidia climbed 6.8%, and without that gain, the S&P 500 would have dropped to a loss for the day.
The chip company's shares snapped a three-day losing streak where they had shed nearly 13% for their worst such stretch since 2022. Nvidia has the power to swing the S&P 500 around because it's grown to become one of Wall Street's largest and most influential companies.
The US stock market's recent record-breaking run has been largely driven by the insatiable demand for chips used in artificial intelligence applications, despite the economy's growth slowing due to high interest rates. However, the AI boom has sparked concerns about a potential stock market bubble and overly optimistic investor expectations.
SolarEdge Technologies saw its shares plummet by 20.6% after announcing that a customer owing them $11.4 million had filed for Chapter 7 bankruptcy, casting doubt on how much the solar power company will be able to recover and when. The Russell 2000 index, which includes smaller companies, also fell by 0.4%.
Retail sales across the country have been fluctuating recently as businesses highlight the struggles of lower-income customers trying to keep up with rising prices. Despite this, the job market remains mostly robust. A report released on Tuesday showed a decline in US consumer confidence this month, but not as much as economists had predicted.
Upper-income households appear to be faring better, with many booking cruises. Shares in Carnival surged 8.7% after the company increased its profit forecast for 2024. The cruise operator reported record-breaking bookings for the rest of the year in terms of both price and occupancy, and anticipates next year could be even better.
In summary, the S&P 500 rose 21.43 points to 5,469.30. The Dow fell 299.05 to 39,112.16, while the Nasdaq composite leapt 220.84 to 17,717.65. The stock market has been under less pressure as yields have dipped, following a peak of 4.70% in late April. This is due to the optimism that inflation is slowing down enough to persuade the Federal Reserve to reduce its main interest rate later this year.
For over 20 years, the Fed has maintained the federal funds rate at an all-time high, aiming to apply just enough pressure on the economy to keep inflation in check. Wall Street is hopeful that the Fed will time the interest rate cut perfectly. If it's too late, the economic slowdown could spiral into a recession. If it's too early, inflation could speed up again.
In other early Wednesday transactions, US benchmark crude oil increased by 29 cents to $81.12 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose by 31 cents to $85.32 per barrel. The dollar strengthened to 159.79 Japanese yen from 159.63 yen. The euro remained almost unchanged at $1.0715.